With their recent 1.54M share purchase @ $.91/share of American Apparel Inc (NYSEMKT:APP), Standard is within 190k shares of tripping the rights offering enacted by the company on 6/27
American Apparel’s Charney files 13d/A
On June 23rd Charney filed this 13d/A:
Item 4. Purpose of Transaction.
Item 4 is hereby amended and supplemented as follows.
Top value fund managers are ready for the small cap bear market to be done
During the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More
On June 18, 2014, the Board of the Issuer notified Dov Charney of the Board’s intent to terminate his employment as the Company’s President and Chief Executive Officer, for cause under Mr. Charney’s employment agreement following a 30-day cure period required under the terms of his employment agreement. Mr. Charney believes that such termination is without merit and intends to contest it vigorously. Effective immediately, the Board suspended Mr. Charney pending the expiration of such cure period. The Board has notified Mr. Charney that it intends to request his resignation from the Board concurrently with the effective time of his termination of employment. The Board also removed Mr. Charney as Chairman of the Board effective immediately.
Following the announcement on June 18, 2014, made by the Issuer of its intent to terminate Mr. Charney’s employment, Mr. Charney was approached by certain persons (the “Supporters”), including stockholders of the Issuer, who expressed support for his continued leadership of the Issuer. On June 19, 2014, Mr. Charney began to discuss with the Supporters potential changes to the composition of the Board and management of the Issuer.
American Apparel’s Charney and supporters may be deemed to constitute a group
As a result of Mr. Charney’s discussions with the Supporters described above, Mr. Charney and the Supporters may be deemed to constitute a “group” under Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that Mr. Charney is a member of a group with the Supporters for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such membership is expressly disclaimed. In addition, neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that Mr. Charney is the beneficial owner of any Common Stock beneficially owned by the Supporters for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such beneficial ownership is expressly disclaimed.
Mr. Charney intends to engage in discussions with the Issuer and Issuer’s management and the Board, other stockholders of the Issuer and other persons that may relate to the afore mentioned matters and/or other matters related to governance and board composition, management, operations, business, assets, capitalization, financial condition, strategic plans and the future of the Issuer. Mr. Charney may also take one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D, and may discuss such actions with the Issuer and the Board, other stockholders of the Issuer and other persons.
American Apparel’s right offering
The Right Offering from 6/27 states:
Item 3.03. Material Modification to Rights of Security Holders.
On June 27, 2014, a duly authorized committee (the “Committee”) of the Board of Directors (the “Board”) of American Apparel Inc (NYSEMKT:APP) (the “Company”) declared a dividend distribution of one right (a “Right”) for each outstanding share of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) to shareholders of record at the close of business on July 10, 2014 (the “Record Date”). Each Right entitles the registered holder to purchase from the Company a unit consisting of one ten-thousandth of a share (a “Unit”) of Series A Junior Participating Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), at a purchase price of $2.75 per Unit, subject to adjustment (the “Purchase Price”). The description and terms of the Rights are set forth in a Rights Agreement, dated as of June 27, 2014 (the “Rights Agreement”), between the Company and Continental Stock Transfer & Trust Company as Rights Agent.
Following is a summary of the terms of the Rights Agreement. The following summary is qualified in its entirety by reference to the Rights Agreement, a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.
Rights Certificates; Exercise Period. Initially, the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate rights certificates (“Rights Certificates”) will be distributed. Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and a distribution date (“Distribution Date”) will occur upon the earlier of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial ownership of fifteen percent (15%) or more of the outstanding shares of Common Stock (the “Stock Acquisition Date”), other than as a result of (a) preexisting beneficial ownership of Common Stock in excess of fifteen percent (15%) at the time of public announcement of the Rights Agreement (provided such person or group does not acquire an additional one percent (1%) of the outstanding shares of Common Stock), (b) repurchases of stock by the Company, (c) certain inadvertent actions by institutional or certain other stockholders or (d) the acquisition of stock pursuant to a Qualified Offer (as defined below), and (ii) 10 business days (or such later date as the Board shall determine) following the commencement of a tender offer or exchange offer (other than a Qualified Offer) that would result in a person or group becoming an Acquiring Person. For purposes of the Rights Agreement, beneficial ownership is defined to include ownership of derivative securities.
American Apparel’s Charney not deemed to beneficially own securities
Under the terms of the Rights Agreement, American Apparel Inc (NYSEMKT:APP)’s Dov Charney will not be deemed to “beneficially own” any of the securities beneficially owned by Standard General L.P. (“SG”), as referenced in Amendment No. 13 to the Schedule 13D dated December 12, 2007, filed by Mr. Charney on June 27, 2014, solely by reason of the letter agreement dated June 25, 2014, between Dov Charney and SG (the “Letter Agreement”). However, Mr. Charney shall be deemed to “beneficially own” all such securities beneficially owned by SG upon either (i) entry into the definitive loan documents contemplated by the Letter Agreement, (ii) entry into the cooperation agreement contemplated by the Letter Agreement, (iii) any purchase of securities by Mr. Charney from SG following execution of the Letter Agreement or (iv) entry into any other agreement, arrangement or understanding with SG which would otherwise give Mr. Charney beneficial ownership of the securities beneficially owned by SG.
Until the Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates (or, in the case of shares reflected on the direct registration system, by the notations in the book entry accounts) and will be transferred with and only with such Common Stock, (ii) new Common Stock certificates issued after the Record Date will contain a notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. Pursuant to the Rights Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will expire at 5:00 P.M. (New York City time) on June 27, 2015 (the “Final Expiration Date”), unless such date is extended or the Rights are earlier redeemed, exchanged or terminated.
Standard General notifies American Apparel’s Charney about the share purchases
Div’s 13D/A filed today
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and supplemented as follows:
On June 27, 2014 Standard General, on behalf of one or more if its funds (“SG”), notified American Apparel Inc (NYSEMKT:APP)’s Mr. Charney that it had purchased 27,351,407 shares of the Issuer’s Common Stock in furtherance of the previously disclosed Letter Agreement (the “Letter Agreement”) between Mr. Charney and SG. Pursuant to the Letter Agreement, Mr. Charney was obligated to purchase such shares of Common Stock and is deemed to be the beneficial owner of such shares. The total purchase price for such shares is $19,556,256, which SG loaned to Mr. Charney on the terms and conditions set forth in the Letter Agreement.
Item 4.Purpose of Transaction.
Item 4 is hereby amended and supplemented as follows.
On June 27, American Apparel Inc (NYSEMKT:APP)’s Mr. Charney sent a letter to the Issuer and the Board of Directors calling a special meeting of stockholders on September 25, 2014 for the purposes of (i) amending the Bylaws to fix the number of directors serving on the Board of Directors at 15 directors, (ii) amending the Bylaws to provide that any vacancies on the Board created by actions taken at the special meeting of stockholders may be filled with individuals identified in any proxy statement filed with the Securities and Exchange Commission in connection with such special meeting, without regard to procedural requirements that the Issuer may otherwise impose, (iii) electing certain individuals to fill any vacancies created by the actions taken at the special meeting, and (iv) repealing amendments to the Bylaws that have been enacted subsequent to October 1, 2010 and prior to the special meeting. Mr. Charney called the special meeting of stockholders pursuant to the authority granted to the Issuer’s Chief Executive Officer in the Issuer’s Bylaws then in effect.
If the Issuer calls a special meeting American Apparel Inc (NYSEMKT:APP)’s Mr. Charney intends to file proxy materials with the Securities and Exchange Commission (the “SEC”) in order to solicit proxies in support of the proposals to be presented at the special meeting of stockholders. In order for such proposals to be adopted the affirmative vote of a majority of the shares of Common Stock represented at the special meeting is required, except with respect to the election of directors to fill vacancies on the Board, which may be filled by a plurality of the votes cast.
In addition, Mr. Charney presently intends to file a consent statement with the SEC and seek written consents from other stockholders approving the matters to be presented at the special meeting of stockholders. Section 228 of the Delaware General Corporation Law provides that the Issuer’s stockholders may take action by written consent without a vote, if written consents signed by the holders of outstanding stock having not less than the minimum number of votes that would be sufficient to authorize or take such action at a meeting at which all shares entitled to vote on such matter were present and voted are delivered to the Issuer’s registered agent in Delaware or its principal place of business. In order for the proposals for which American Apparel Inc (NYSEMKT:APP)’s Mr. Charney intends to seek consent to be adopted, written consents signed and dated by the holders of a majority of the outstanding shares of Common Stock as of the close of business on the record date must be delivered to the Issuer’s registered agent in Delaware or its principal place of business within 60 days of the record date.
American Apparel’s Charney continues to engage in discussions with the issuer
Mr. Charney continues to intend to engage in discussions with the Issuer and Issuer’s management and the Board, other stockholders of the Issuer and other person that may relate to matters related to governance and board composition, management, operations, business, assets, capitalization, financial condition, strategic plans, the future of the Issuer and other matters concerning the Issuer.
WE URGE INVESTORS TO READ THE PROXY MATERIALS AND CONSENT STATEMENT AND RELATED MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE ISSUER AND THE PROPOSALS TO BE BROUGHT BEFORE THE STOCKHOLDERS AT THE SPECIAL MEETING AND IN MR. CHARNEY’S WRITTEN CONSENT. Investors may also obtain a free copy of the proxy statement, consent statement and other relevant documents when they become available as well as other materials filed with the SEC concerning the Issuer at the SEC’s website at http://www.sec.gov.
In accordance with Rule 14a-12(a)(1)(i) under the Exchange Act, the following personas are presently anticipated to be, or may be deemed to be, participants in any such solicitation: Dov Charney. Mr. Charney beneficially owns 74,560,813 shares of Common Stock in the Issuer, including 27,351,407 shares over which Mr. Charney obtained beneficial ownership as a result of the Letter Agreement between Mr. Charney and SG.
American Apparel’s Charney may formulate plans or proposals intended to enhance investment value
American Apparel Inc (NYSEMKT:APP)’s Mr. Charney may also consider, formulate, discuss and seek to cause the Issuer to implement various plans or proposals intended to enhance the value of his current or future investment in the Issuer, enhance stockholder value or enhance the value of the Issuer’s assets, including plans or proposals that may involve extraordinary matters relating to the Issuer. Any such action may be taken or advocated by Mr. Charney alone or in conjunction with other shareholders and/or other third parties, and could include one or more purposes, plans or proposals that relate to or would result in any of the transactions, matters or effects enumerated in Items 4(a) through (j) of Schedule 13D.
In addition to acquiring securities as contemplated by the Letter Agreement, American Apparel Inc (NYSEMKT:APP)’s Mr. Charney intends to evaluate various alternatives that are or may become available with respect to the Issuer and its securities. Mr. Charney may from time to time acquire additional equity or debt securities or other instruments of the Issuer or dispose of such equity or debt securities or other instruments in any amount that Mr. Charney may determine in his sole discretion, through open market transactions, privately negotiated transactions or otherwise.
The information set forth in this Item 4 is subject to change , and there can be no assurances that the discussions or activities described in this Item 4 will continue or occur or that American Apparel Inc (NYSEMKT:APP)’s Mr. Charney will or will not take, or cause to be taken, any of the actions described above or any similar actions.
The information in Item 3 above is hereby incorporated herein by reference.
Here is the issue, check out the trading data from Standard:
The rights offering above states that the most a 15% or larger “group” can acquire is not more than another 1%. With 173M shares out that comes to 1.73M share after the 27th. Standard is right up to the line.